Hewlett-Packard Co. said late Wednesday a preliminary vote count of its proposed buyout of Compaq Computer Corp. shows investors approved the measure by a margin of 45 million shares out of more than 1.63 billion shares cast.
The results of the March 19 polling of HP shareholders are being disputed, however, by major stockholder Walter Hewlett, who has filed suit against the company alleging it mislead and coerced investors into voting to approve the $19 billion buyout.
According to a ballot count overseen by IVS Associates Inc. and released by HP today, approximately 837.9 million shares were voted in favor of the merger, while 792.6 million were cast against it.
The heirs of HPs late co-founders, who have publicly opposed the deal since last year, accounted for about half of the ballots voted against the merger.
Shareholders not associated with the Hewlett or Packard families, HP said, supported the merger by a 2 to 1 margin.
"We are gratified the preliminary vote tally validates that HP shareowners voted the majority of their shares in support of the merger," HP Chairman Carly Fiorina said in a statement accompanying the results. "We are eager to put this difficult period behind us and look forward to doing business as the new HP."
But HP still must overcome several hurdles before it can complete its acquisition of Houston-based Compaq, including defending itself in court against charges leveled by Hewlett accusing the company of overstepping ethical bounds to win the shareholder support it needed to complete the deal.
In the trial set to start Tuesday in the Delaware Chancery Court, Hewlett will seek to show that HP executives illegally pressured at least one major shareholder, Deutsch Asset Management, a subsidiary of Deutsch Bank, into voting about 17 million shares in favor of the merger by threatening to withhold business from the bank if it failed to support the deal.
Hewletts lawsuit claims HP executives misled shareholders by providing unrealistic projections of future earnings and savings that would be gained if the two computer makers merged operations.
HP has vigorously denied the charges, but failed to convinced the court to dismiss the case in a hearing last week.
Following the filing of Hewletts lawsuit March 28 in Delaware Chancery Court, two federal agencies initiated separate investigations into the charges.
The U.S. Attorneys Office for the Southern District of New York subpoenaed HP, the company disclosed yesterday, to turn over information related to its efforts to lobby Deutsch Bank and Northern Trust, another investment bank that controls a large share of HP stock.
The Securities Exchange Commission district office in San Francisco also asked HP to voluntary turn over communications and documents tied to its lobbying campaign as well, the company said.